Tariff uncertainty continued to weigh on Vancouver’s housing market in March, deepening the slowdown in activity. Escalating U.S. trade actions have fuelled fears of a recession, job losses and equity market volatility, pushing many potential buyers to the sidelines.
The latest data from the Greater Vancouver and Fraser Valley real estate boards (showed a deepening of the sales pullback in March. MLS sales fell 17.6 per cent year over year—slightly worse than February. Seasonally adjusted sales fell 10 per cent by our calculation, down for a fourth straight month. Since November, the monthly pace of sales is down 35 per cent and back to the lows of 2022 that followed interest rate shock. The upward momentum we saw before the U.S. presidential election is gone. While there have certainly been some factors working against demand—including weaker population growth outlook and a tempered economic performance—other factors such a lower interest rates and relaxed financing policies were supportive. The severe drop in home sales aligns with declining business confidence, which has plunged to record lows—a pretty good bet that weak confidence is playing out in housing.
With sales held back, inventory has ballooned. Active listings were up 43 per cent year over year and marching higher. Seasonally adjusted inventory rose seven per cent month to month, the highest since 2013. The average price held steady but came in 4.5 per cent lower than a year ago. Composition matters and benchmark values held up a bit better but are also showing signs of teetering.
If confidence from tariff threats was the only concern, this period of weakness could be expected to pass quickly. That said, the quick evolution of the trade war means this downturn could deepen. B.C.’s diversification of trade towards Asia and services was poised to help the province weather the U.S. tariff storm. However, the huge tariffs applied to major Asian markets last week could rock the global economy, hinder growth and worsen B.C.’s economic performance.
Meanwhile, after recording a surplus in merchandise trade balance for two consecutive months, Canada’s trade balance shifted to a deficit in February as exports retreated significantly following a frontloading of U.S. imports. Exports fell by 5.5 per cent on a seasonally adjusted basis while imports increased by 0.8 per cent, bringing in a deficit of $1.5 billion following the surplus of $3.1 billion in January.
B.C. also reported lower merchandise exports in February, declining by 16.2 per cent month to month (down $824.7 million), after increasing by 6.5 per cent in January. Unadjusted for seasonality, merchandise exports from the province were down 1.5 per cent year over year. This was as a result of lower metal and non-metallic mineral products exports (down 19.8 per cent or $81.9 million). Forestry products and building and packaging materials exports fell by 8.2 per cent (down $82.5 million). In contrast, metal ores and non-metallic minerals exports increased by 31.5 per cent (up $83.8 million), while electronic and electrical equipment and parts exports rose by 17.7 per cent (up $43.1 million).
Imports declined in February by 13.5 per cent or $863.6 million. On a yearly basis, imports to B.C. decreased by 11 per cent, as energy imports decreased by 71.8 per cent (down $374.9 million) and motor vehicles and parts imports dropped by 24.3 per cent (down $205.2 million) during the period. In contrast, consumer goods imports increased by 4.1 per cent (up $62.7 million).
Bryan Yu is chief economist at Central 1.
